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Alcoa (AA)
NYSE:AA
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Alcoa
(NYSE:AA)
63Neutral
Positive Factors
Debt management
The use of cash flow to reduce net debt should be a positive for the Alcoa equity valuation over time.
Market outlook
A tighter aluminum market should offset falling alumina prices and keep profitability elevated.
Strategic actions
Alcoa has recently taken several pivotal strategic actions to strengthen its business, including the sale of the Ma’aden joint venture interest, the acquisition of Alumina Ltd, and over-delivering on its profitability program.
Negative Factors
Aluminum market challenges
The aluminum markets are expected to remain challenged for the foreseeable future, with growing recession concerns and evolving trade policy likely to keep markets in surplus.
San Ciprián smelter
The planned restart of the San Ciprian smelter under the viability agreement is expected to have a negative $70-90m impact on 2025 EBITDA and negative $100-120m impact on FCF for next year.
Tariff impact
The impact of the tariffs on the Canadian business alone equates to $400-425m per year based on current market conditions.
Alcoa (AA) vs. S&P 500 (SPY)
Market Cap
$6.61B
Dividend Yield1.64%
Average Volume (3M)7.09M
Price to Earnings (P/E)7.6
Beta (1Y)1.81
Revenue Growth21.56%
EPS GrowthN/A
CountryUS
Employees13,900
SectorBasic Materials
Sector Strength60
IndustryAluminum
Share Statistics
EPS (TTM)2.15
Shares Outstanding258,902,340
10 Day Avg. Volume6,264,374
30 Day Avg. Volume7,085,022
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.42
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit5.05
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$31.67Price Target Upside23.13% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Alcoa Business Overview & Revenue Model
Company DescriptionAlcoa Corporation, together with its subsidiaries, produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Iceland, Norway, Brazil, Canada, and internationally. The company operates through three segments: Bauxite, Alumina, and Aluminum. It engages in bauxite mining operations; and processes bauxite into alumina and sells it to customers who process it into industrial chemical products, as well as aluminum smelting and casting businesses. The company offers primary aluminum in the form of alloy ingot or value-add ingot to customers that produce products for the transportation, building and construction, packaging, wire, and other industrial markets. In addition, it owns hydro power plants that generates and sells electricity in the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies. The company was formerly known as Alcoa Upstream Corporation and changed its name to Alcoa Corporation in October 2016. The company was founded in 1888 and is headquartered in Pittsburgh, Pennsylvania.
How the Company Makes MoneyAlcoa makes money primarily through the sale of bauxite, alumina, and aluminum products. The company operates across three main segments: Bauxite, Alumina, and Aluminum. The Bauxite segment involves mining and selling bauxite to both internal and external customers. The Alumina segment focuses on refining bauxite into alumina, which is then sold to aluminum producers, including Alcoa's own Aluminum segment. The Aluminum segment involves the smelting of alumina into primary aluminum, which is further processed and sold as value-added products to various industries. Alcoa's revenue model is heavily influenced by the global demand and pricing of aluminum and alumina, as well as its operational efficiency and strategic partnerships with other companies in the supply chain.
Alcoa Financial Statement Overview
Summary
Alcoa demonstrates strong revenue growth and operational efficiency improvements, resulting in better profitability metrics. The balance sheet is strengthened by lower leverage and improved equity returns. However, cash flow management poses a challenge with negative free cash flow growth. Overall, Alcoa is on a positive trajectory but needs to address cash flow issues to sustain long-term growth.Income Statement
Alcoa shows a strong revenue growth with a 7.9% increase in TTM compared to the previous year. The gross profit margin improved significantly to 39.7% TTM. However, net profit margin remains low at 6.8% TTM, albeit an improvement from the previous year. EBIT and EBITDA margins have both improved to 33.5% and 16.9% TTM respectively, indicating better operational efficiency.72
Positive
Balance Sheet
Alcoa's balance sheet reflects a robust equity position, with an equity ratio of 39.9% TTM. The debt-to-equity ratio has improved significantly to 0.01 TTM, indicating lower leverage. Return on equity has improved to 14.8% TTM, showing better profitability. However, the high total liabilities pose a risk to financial stability.68
Positive
Cash Flow
Operating cash flow has increased by 47.9% TTM, showing strong cash generation. However, free cash flow growth is negative, declining by 17.1% TTM, highlighting concerns over capital expenditures. The operating cash flow to net income ratio is 1.07, indicating efficient cash conversion, but free cash flow to net income ratio remains low at 0.40.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 11.89B | 10.55B | 12.45B | 12.15B | 9.29B | Gross Profit |
| 1.85B | 738.00M | 2.24B | 3.00B | 1.32B | EBIT |
| 1.52B | -584.00M | 702.00M | 1.20B | 173.00M | EBITDA |
| 1.52B | 48.00M | 1.32B | 1.86B | 826.00M | Net Income Common Stockholders |
| 60.00M | -651.00M | -123.00M | 429.00M | -170.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.14B | 944.00M | 1.36B | 1.81B | 1.61B | Total Assets |
| 14.06B | 14.15B | 14.76B | 15.03B | 14.86B | Total Debt |
| 2.82B | 1.92B | 1.87B | 1.87B | 2.62B | Net Debt |
| 1.68B | 971.00M | 503.00M | 52.00M | 1.02B | Total Liabilities |
| 8.91B | 8.31B | 8.17B | 8.74B | 9.84B | Stockholders Equity |
| 5.16B | 4.25B | 5.08B | 4.67B | 3.31B |
| Cash Flow | Free Cash Flow | |||
| 42.00M | -440.00M | 342.00M | 530.00M | 41.00M | Operating Cash Flow |
| 622.00M | 91.00M | 822.00M | 920.00M | 394.00M | Investing Cash Flow |
| -608.00M | -585.00M | -495.00M | 565.00M | -167.00M | Financing Cash Flow |
| 201.00M | 57.00M | -768.00M | -1.16B | 514.00M |
Alcoa Technical Analysis
Neutral
25.72
Price Trends
28.77
Negative
32.73
Negative
35.07
Negative
Market Momentum
-0.99
Negative
47.65
Neutral
53.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AA, the sentiment is Neutral. The current price of 25.72 is above the 20-day moving average (MA) of 24.84, below the 50-day MA of 28.77, and below the 200-day MA of 35.07, indicating a neutral trend. The MACD of -0.99 indicates Negative momentum. The RSI at 47.65 is Neutral, neither overbought nor oversold. The STOCH value of 53.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AA.
Alcoa Risk Analysis
Alcoa disclosed 28 risk factors in its most recent earnings report. Alcoa reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Alcoa Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.82B | 23.72 | 25.44% | 0.21% | 17.83% | 50.28% | |
68 Neutral | $1.09B | 25.80 | 6.16% | 4.63% | 1.56% | -22.11% | |
63 Neutral | $6.61B | 7.56 | 17.53% | 1.64% | 21.56% | ― | |
63 Neutral | $1.55B | 24.07 | 7.93% | ― | -2.29% | -48.13% | |
61 Neutral | $1.53B | 5.11 | 17.80% | ― | 11.42% | -49.21% | |
49 Neutral | $1.94B | -1.23 | -21.28% | 3.73% | 1.19% | -29.73% | |
41 Neutral | $4.26B | ― | -17.27% | ― | -15.00% | -423.14% |
* Basic Materials Sector Average
Performance Comparison
AA
Alcoa
25.72
-11.22
-30.37%
CENX
Century Aluminum
15.51
-1.62
-9.46%
CLF
Cleveland-Cliffs
7.15
-10.30
-59.03%
KALU
Kaiser Aluminum
68.41
-25.07
-26.82%
USLM
United States Lime & Minerals
99.45
25.30
34.12%
CSTM
Constellium
11.19
-8.97
-44.49%
Alcoa Earnings Call Summary
Earnings Call Date:Apr 16, 2025
(Q1-2025)
| % Change Since: 2.59%|
Next Earnings Date:Jul 16, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial and production results, an increase in net income, and successful debt management. However, challenges such as revenue decline, the impact of U.S. tariffs, and costs associated with the San Ciprian restart were significant concerns.Q1-2025 Updates
Positive Updates
Strong Financial and Production Results
Alcoa achieved strong first-quarter financial and production results, with significant improvements in safety performance and operational stability across most operations.
Increase in Net Income and EPS
Net income attributable to Alcoa increased to $548 million from $202 million in the previous quarter, with earnings per common share more than doubling to $2.07 per share.
Joint Venture Formation and Debt Management
Alcoa formed a joint venture with Ignis EQT for the San Ciprian operations and completed a $1 billion debt offering in Australia, using proceeds to repay existing debt and extend maturities at a lower after-tax interest expense.
Positive Free Cash Flow
Alcoa ended the first quarter with $1.2 billion in cash, driven by strong EBITDA and positive cash from operations despite high working capital build.
Negative Updates
Revenue Decline
Revenue decreased 3% sequentially to $3.4 billion, with declines in third-party revenue in the Alumina segment due to lower average realized prices and shipments.
Impact of U.S. Tariffs
The U.S. Section 232 tariffs on Canadian aluminum imports significantly impacted Alcoa, with an estimated annual net negative impact of approximately $100 million.
Challenges with San Ciprian Restart
The restart of the San Ciprian smelter is expected to result in a negative cash flow impact of $90 million to $110 million for 2025 due to inefficiencies and other costs.
Company Guidance
In the first quarter of 2025, Alcoa Corporation reported a strong performance, with a sequential revenue decrease of 3% to $3.4 billion and net income attributable to Alcoa rising to $548 million. Earnings per share more than doubled to $2.07, while adjusted net income was $568 million or $2.15 per share. The adjusted EBITDA increased by $178 million, reaching $855 million. Despite economic uncertainties, Alcoa maintained operational stability, showing improved production metrics, such as a 91% capacity operation at the Alumar smelter in Brazil. The company executed a $1 billion debt offering in Australia, which provided cash flow flexibility, ending the quarter with $1.2 billion in cash. Alcoa plans to maintain its capital allocation framework, targeting an adjusted net debt range of $1 billion to $1.5 billion. They also adjusted their full-year depreciation expense forecast to $620 million, citing favorable currency impacts. However, Alcoa faces challenges with U.S. Section 232 tariffs on Canadian aluminum, which are expected to cost approximately $400 to $425 million annually, impacting the second quarter performance by around $105 million. Despite these challenges, Alcoa's strategic actions, such as forming a joint venture with Ignis EQT and resuming production at the San Ciprian smelter, are expected to support their continued resilience and strategic objectives.Alcoa Corporate Events
Executive/Board ChangesShareholder Meetings
Alcoa Chairman Steven W. Williams to Leave Board
Neutral
Feb 21, 2025
On February 20, 2025, Steven W. Williams announced he will not seek re-election to Alcoa’s Board of Directors at the 2025 Annual Meeting, having served since 2016 and as Chairman since 2021. His departure is amicable and part of planned changes, which will see the Board reduce to eleven members, as he has been instrumental in Alcoa’s transformation into a leading aluminum company.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.